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Buyers: New Home vs. Resale


"…read This BEFORE You Visit Your First Model Home!"

When shopping for your home, you’ll discover that most homes on the market
are resales. Yet, one out of four homebuyers purchases a new home. Both new
homes and resales offer advantages. Before you make a decision, let’s . . .

Compare These Points!

New Homes

  • offer innovative use of space and style
  • greater energy efficiency
  • a choice of options and upgrades
  • everything is new, and modern.

Existing Homes

  • on the average they are less expensive
  • often they are in established neighborhoods with mature landscaping
  • homes have already settled, eliminating possible problems that arise from
    this happening after the purchase of home
As you can see, there are advantages to both. Most people consider both new
and existing homes before they decide to purchase. Should you be thinking about
buying a new house, here are 10 points to consider before you visit your first
model home.

1. Determine a Comfortable Price Range

Before you visit your first model home, sit down with your agent and do your
homework. You’ll want to be prepared so that you can determine a comfortable
price range for your new home.  If you
own a home, you’ll first need to know the net proceeds from its sale in order to
determine how much cash you’ll have to work with. Don’t simply estimate this but
carefully calculate every possible selling cost. If you’re a first time buyer,
you’ll need to first qualify your income. Determine the size of your down
payment, then work out a monthly debt load so you can determine a comfortable
price range.

2. Sellers’ Agents Versus Buyers’ Agents

Here’s a good point to remember. The sales agent in the model home represents
the builder, not you. They are known as sellers’ agents. As a buyer you can work
with a buyers’ agent at no additional cost. It’s his/her business to best
represent your needs by being knowledgeable about home construction,
warranties, financing, differences in pricing, quality, even lot selection so
that you get the best value for your money.

3. A Builder For All Reasons

Like all tradesmen, builders vary in their fields of expertise. For example
there are builders who specialize in craftsmanship, others who are known for
their innovative use of space, and those who offer below-market financing or
customer attention during construction and after move-in. Determine your own
specific needs or preferences then shop around for a builder that will best
address your requirements.

4. Get the Facts About Your Builder

Before making a final decision, it is wise to check out the reputation and
financial strength of the builder. Get "spec sheets" on home features
covering everything from floor plans to energy efficiency, including lot
availability and delivery of your home.

5. Check Out the Neighborhood

  • Learn as much as you can about the community.
  • Discover what amenities it has to offer.
  • Investigate if financial reserves have been set aside to build or replace
    major amenities like schools or community roads
  • Find out from local land-use officials what else is planned or could be
    constructed in the area, especially where vacant land is applicable.
  • Review the rules for the homeowner’s association, or find out if one will
    be set up.
  • Think of how you will be affected by commuting routes and times.

6. Choosing Options and Upgrades

The less expensive the base price of the house is, the more options and
upgrades you can add without fear of overpricing it for the neighborhood.
Options are items the builder installs during construction, such as adding
usable space like a sunroom or a powder room. These features can add the most to
the resale value of your home. Upgrading means selecting quality above
"builder standard" such as carpeting, ceramics, detailing, kitchen
fixtures and appliances. Be sure to take advantage of builder incentives that
offer free upgrades or credit off the sale price. Remember, you can add a deck,
finished basement or landscaping later and sometimes for less money.

7. Negotiations

Often buyers don’t realize that there may be room for negotiating price,
upgrades or options. For example, you have some scope for negotiating with the
builder if s/he has a completed a home but hasn’t sold it. Also some
"premium lots" are priced higher and are sometimes saved to be sold
last. Keep in mind that typically, all lots cost the builder the same, so be
sure to enquire about lot pricing. Builders may offer discounts or special
financing to help close a sale.

8. Be Sure the Contract Works in Your Favor!

When spelling out the particulars of an agreement with your builder, ensure
you protect yourself by having safeguards written into the agreement, such as:
  • placing your deposit in escrow
  • detailing your upgrades;
  • allowing you access to the construction site to check on progress;
  • a 30-day advance notice of the closing date.
  • an explanation of what the fine print means in the warranties of the
    builder and manufacturer.

9. Financing – What’s Best for You?

Some builders, especially in high-volume communities that place large numbers
of loans, can offer special financing packages. However, because "home
loan" lending is highly competitive, you have many financing choices other
than those being offered by the builder. Shop around for everything, from rates
to lender fees. Appraisals, inspections, surveys, attorneys and closing fees can
vary as well.

10. Just Because it’s New…. – Doesn’t Mean it’s Perfect

Yes it’s new and typically it’s built with modern materials that are durable,
low maintenance, stronger, quieter, and safer. But because nothing is perfect,
even if it’s new, consider hiring a reputable, licensed home inspector. Then
create a builder "punch list", from what you’ve learned to address any
problems before closing. Consider budgeting for items to be modified or added
later on. Many new home buyers use a real estate agent to help them negotiate
the best price and terms with the builder.

Buyer Advantages Your Builder May Not Reveal!

Here’s a fact that you may not be aware of, some builders have
newly-constructed homes available for immediate delivery. Usually these homes
are ready to move into within 30 days. Even if some builders are eager to sell,
they’ll probably keep that knowledge to themselves. Immediate delivery homes
are often available for various reasons:
  • the community, where new homes are being constructed is nearly complete,
    so the builder proceeds to have the on-site-contractors build
    "spec" homes (homes built on speculation for sale) on the last
    lots;
  • the model home is for sale;
  • the contract on a home has fallen through;
  • builders include constructing homes for immediate delivery for buyers who
    are relocating or who have sold their previous home and need one to move
    into quickly.
Immediate delivery homes may be more desirable because, sometimes builders
offer financing incentives or free options. This may be done in place of
chopping prices to appeal to buyers purchasing later in the building phase. An
immediate delivery home is an advantageous way to purchase a home if you need to
move in quickly, or need a physical space to walk through and see before you sign a contract. Be sure to enquire.